Personality, IQ, and Lifetime Earnings: The payoffs to personality traits display a concave life-cycle pattern, with the largest effects between the ages of 40 and 60

Personality, IQ, and Lifetime Earnings. Miriam Gensowski. Labour Economics, https://doi.org/10.1016/j.labeco.2017.12.004

Highlights
•    This paper estimates the effects of personality traits and IQ on lifetime earnings, both as a sum and individually by age.
•    The payoffs to personality traits display a concave life-cycle pattern, with the largest effects between the ages of 40 and 60.
•    The largest effects on earnings are found for Conscientiousness, Extraversion, and Agreeableness (negative).
•    An interaction of traits with education reveals that personality matters most for highly educated men.
•    The overall effect of Conscientiousness operates partly through education, which also has significant returns.

Abstract: This paper estimates the effects of personality traits and IQ on lifetime earnings of the men and women of the Terman study, a high-IQ U.S. sample. Age-by-age earnings profiles allow a study of when personality traits affect earnings most, and for whom the effects are strongest. I document a concave life-cycle pattern in the payoffs to personality traits, with the largest effects between the ages of 40 and 60. An interaction of traits with education reveals that personality matters most for highly educated men. The largest effects are found for Conscientiousness, Extraversion, and Agreeableness (negative), where Conscientiousness operates partly through education, which also has significant returns.

Keywords: Personality traits; Socio-emotional skills; Cognitive skills; Returns to education; Lifetime earnings; Big Five; Human capital; Factor analysis